Billy Kelleher (Cork North Central, Fianna Fail)
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To ask the Minister for Finance his views on the operation of the Standard Financial Statement for customers in financial distress; if he has plans to amend the SFS; and if he will make a statement on the matter. [14039/13]

Michael Noonan (Limerick City, Fine Gael)
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I, as Minister for Finance have no statutory role in relation to the operation of the Standard Financial Statement. However, I have been informed by the Central Bank that one of the recommendations of the Expert Group on Mortgage Arrears and Personal Debt was that a “standard financial statement” (SFS) should be developed for use by all lenders and MABS, to assess a borrower’s financial position and to identify a best course of action. A standard format for the SFS was developed by the IBF and MABS and approved by the Central Bank in 2011 and all lenders are required to use this SFS when dealing with consumers under the Mortgage Arrears Resolution Process (MARP) as set out in the Code of Conduct on Mortgage Arrears.

The SFS is a key component to the effectiveness of the MARP as it requires consumers to objectively assess their incomings and outgoings, assets and liabilities and it provides the lender with valuable information regarding the financial position of the borrower. The standard format for the SFS requires a comprehensive review of the borrower’s financial position and brings increased consistency to the process and ensures that all assessments of a borrower’s case are based on a common analysis of their financial circumstances.

Guidance has been prepared for consumers by MABS and the Central Bank which informs the borrower of the importance of completion of the SFS and also the commitment of their lender to assist them with the process.

The Central Bank published a consultation paper as part of a review of the CCMA on 13 March 2013 and the use of the SFS is being considered as part of this review. In this regard since the introduction of the SFS, a number of wide ranging, and sometimes contradictory, views have been expressed.

Some lenders have highlighted borrower dissatisfaction, as well as their own concerns, that the level of information sought is excessive, particularly in respect of borrowers with a more straightforward arrears situation (for example, where the borrower has had a one-off unexpected expense which has temporarily created an arrears issue). In addition, some lenders maintain that the time taken to complete and assess the SFS is leading to delays in putting arrangements in place, which can result in a deterioration of the borrower’s position, while they are awaiting the completion of the review.

However, the consumer research conducted on behalf of the Central Bank concluded that 71% of borrowers surveyed were satisfied with the overall ease of completing the SFS. In addition, a number of lenders have expressed the view that the full range of information contained in the SFS is relevant and necessary in order to facilitate full consideration of the borrower’s situation. This view is supported by the Central Bank’s analysis of data from the main lenders.

In recognition of the time it may take to complete and assess the SFS and the potential deterioration in a borrower’s arrears situation while this process is being carried out, the Central Bank is proposing to clarify that a lender may put a temporary arrangement in place for a period of no more than three months, prior to receiving, and completing a full review of, the SFS.

In addition, a new requirement is proposed for lenders to offer to assist borrowers in completing the SFS.

The Central Bank agrees that there may be some situations where the full range of information contained in the SFS is not required, and is seeking views on those potential situations and the information that would be required in each situation to facilitate proper consideration of the borrower’s case.

Further details on the full consultation can be found at following link: .